Aisle of Lost Toys

After failing to emerge from Chapter 11 bankruptcy, the iconic toy retailer, Toys ‘R’ Us, is going to liquidate all its stores in the U.S..

The demise of Toys ‘R’ Us hits small toy vendors and makers especially hard as they may not be able to collect the $14 to $15 million owed. The loss of a major specialty toy retailer like Toys ‘R’ Us also leaves toy makers without a mass distributor or a physical showcase for innovative toys.

1. What are the impacts of the liquidation of Toys ‘R’ Us on the retailer’s suppliers?

Guidance: Discussion points include loss of a key downstream partner, loss of payment for goods shipped to the retailer, and the effort required to find new partners/mass distributors.

2. What are the impacts on the toy industry’s supply chain of liquidation by Toys ‘R’ Us?

Guidance: The many losses include loss of a mass distributor, loss of a physical showcase for new toys, loss of small toy makers and/or vendors, and reduced toy selection for customers. It is likely that the toy retailers’ market share will be divvied up among e-tailers such as Amazon, and big-box retailers.